Sunday, June 17, 2007

SOUTH CAROLINA INVOLVED IN INTERNET START-UP. PROBABLY ILLEGAL

An interesting story Sunday in The State about the involvement of several current and former USC/Clemmons playing/broadcast types getting involved in an "alleged" pyramid scheme known as BurnLounge. Somehow, I would think that would be more of a West Virginia-type name, but I guess that would be BurnLoungeChair.

Before making enemies with the Federal Trade Commission, Rob DeBoer tried to make as many friends as he could.

Unfortunately for Rob, the FTC has subpoena power and most of his friends, it appears, do not.

DeBoer, who was sued for allegedly misrepresenting earnings from BurnLounge, promoted the New York-based company with ex-USC quarterback and Gamecock football announcer Todd Ellis -- helping turn Columbia into ground zero for BurnLounge.

Anyone who has listened to Ellis' voice should know not to trust the man. He sounds like the guy who runs the chop shop down the block.


Pyramid scheme, BurnLounge! Pyramid scheme, Todd Ellis!

This would also be fitting for Columbia. When it finally becomes the "ground zero" of something in the online business world, it ends up being a cheap and possibly illegal iTunes knock-off.

They hosted events in Columbia nightspots and living rooms to market BurnLounge franchises — customizable Web pages that rewarded buyers with free music or cash for selling songs or additional franchises priced between $30 and $430.
Their promotion, along with the involvement of other well-known sports personalities, created a jock-inspired network of investors across the Sunbelt, including University of Oklahoma football head coach Bob Stoops and some of the biggest names on both sides of the Clemson-South Carolina rivalry.
Ex-Clemson football coach Danny Ford and former USC running back and Heisman Trophy winner George Rogers both said they lent their names in exchange for franchises that ended making little or no money.
Those invested in BurnLounge sites included USC football head coach Steve Spurrier's sons — one a Gamecocks assistant coach, the other a player on the team. ...
Individual BurnLounge pages were marketed as an alternative to iTunes — a place to steer friends to buy music.
BurnLounge’s payments, the FTC said, are structured so that investors are rewarded much more lucratively for selling franchises instead of products — the definition of a pyramid scheme.
BurnLounge, in a statement, said, "We believe that the complaint does not reflect the reality or substance of our business, and we are working with the government to address their concerns." ...
USC athletics director Eric Hyman said the university is reviewing the actions of those involved with BurnLounge to see if any disciplinary action is warranted.

Well, I for one am shocked -- shocked -- that Danny Ford would be associated with anything that has the slightest whiff of impropriety. That would be so uncharacteristic of the man who bought won Clemson it's first (and only) national championship.

My guess is that it's not going to be a huge deal for the current athletes and coaches involved. Let's face it, Bob Stoops probably doesn't spend a lot of time looking over his portfolio to see which of his investments are illegal pyramid schemes. There might be some wrist slaps from athletics departments and/or the NCAA.

Some of the former players in the article also seem to be victims -- at least by what they say. George Rogers seems genuinely pissed at BurnLounge. But I would think the former players as a group have more to worry about, because they'll have a harder time convincing regulators -- and mayhaps a jury? -- that they had other things to attend to.

But we'll see. Stay tuned.

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